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Economic Systems

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Introduction

Economic Systems There are a variety of economic systems today, which can influence how prosperous we will be as individuals or as a group. Socialism is an economic system where the government will be greatly involved in the economy. In a socialist economy the government can control many industries, provide public institutions such as health care and education, and equalize incomes of the population. A socialist economy is one of low unemployment and stability, where the government sets production quotas and price regulation upon their perception of the needs of the economy. On the other hand, a capitalistic economy is an economic system where there is a very limited amount of government involvement. The capitalistic economy is based on the demand of consumers and the supply of producers. There is a great advantage of living in a nation where there is a low amount of government intervention in the economy, because government intervention reduces the freedom of markets, causes a slow growing economy, and exploits the consumers in the economy. ...read more.

Middle

The effect of control of the economy limits the direction in which the economy will grow. Secondly, the restrictions by the government in a social economy cause slow growth. Since the incomes of the population are distributed equally, people lose the personal initiative to better themselves because others will be gaining the benefits if they work hard themselves. This concept of bettering oneself then helping society doesn't exist, but bettering society then helping oneself does exist. For example, in a factory no one would take an administration title if they were getting the same salary as someone who was involved in labour, resulting in the higher demand for administrators, but no perks to retrieve them. Since the government equalizes the population's income people spend less on technology therefore depressing the production of new technology. Furthermore, when socialist governments restrict the production in the economy, room for a black market is formed in order to provide a variety of products from other countries. ...read more.

Conclusion

Since production quotas need to be met, industries will sacrifice the quality to increase quantity of there goods. This is a misfortune for consumers, because the consumers have no choice but to buy poor quality goods due to unreasonable production quotas. The restrictions placed on industries in a social economy will affect the price, variety, and quality of products produced in their economy. In conclusion, there is a great advantage of living in a nation where there is a low amount of government intervention in the economy, because government intervention reduces the freedom of markets, causes a slow growing economy, and exploits the consumers in the economy. Capitalism provides a marketplace where industries compete in order attract more consumers, therefore providing more efficient, qualitative and plenty of variety for consumers. This efficiency, quality, and variety will help the economy grow in whatever way it wants to, making capitalism the most flexible economic systems. The nature of human beings is, one is satisfied, when he/she has provided the necessities for himself first, then the people around him. ...read more.

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